Triumph Group Reports Third Quarter Fiscal 2017
Results

BERWYN, Pa.--(EON: Enhanced Online News)--Triumph Group, Inc. (NYSE:TGI) (“Triumph” or the “Company”)
today reported financial results for its third quarter of fiscal year
2017, which ended December 31, 2016.

“Our third quarter performance reflected a continued focus on working
capital initiatives, as well as improved margins in our Integrated
Systems and Product Support segments, which partially offset the impact
of anticipated volume declines on legacy programs”

Net income was $29.3 million, or $0.59 per diluted share; excluding
the aforementioned costs, net income was $50.1 million, or $1.01 per
diluted share.

Cash used in operations was $41.4 million, a 12% improvement from the
second quarter of fiscal 2017.

Free cash flow use was $37.4 million, a 24% improvement from the
second quarter of fiscal 2017.

Reaffirms revenue guidance of $3.5 to $3.6 billion and earnings per
diluted share guidance of $3.15 to $3.45.

Adjusts fiscal 2017 cash use guidance to $190.0 million to $210.0
million due to higher working capital requirements related to major
development program.

“Our third quarter performance reflected a continued focus on working
capital initiatives, as well as improved margins in our Integrated
Systems and Product Support segments, which partially offset the impact
of anticipated volume declines on legacy programs,” stated Daniel J.
Crowley, Triumph’s president and chief executive officer. “Our new
business pipeline and win rate continue to improve, and we are pleased
to have added several new customers in the third quarter. We’ve
completed many of the critical steps of our strategy over the past three
quarters and remain focused on transforming all aspects of our business
in order to deliver value to our shareholders.”

“We are executing our One Triumph transformation strategy and are on
track to exceed our full year cost savings goal of $44 million.
Additionally, we announced definitive agreements to divest two
businesses as part of our ongoing efforts to streamline our portfolio
and strengthen our balance sheet. As our Precision Components segment
works through its restructuring, we were pleased that the segment’s
Interiors business received the 2016 Partner of the Year Award from
Mitsubishi Heavy Industries.”

Third Quarter Fiscal 2017 Overview

Net sales for the fiscal third quarter of 2017 declined 8% from the
prior year quarter net sales, including $1.2 million of incremental
sales from the October 2015 acquisition of Fairchild Controls offset by
$4.5 million of revenues related to the second quarter divestiture. On
an organic basis, sales were down 7% primarily due to production rate
reductions by customers on the 747-8, G450/550 and C-17 programs,
changes in model mix, decreased demand in commercial rotorcraft and
foreign exchange rates. These factors were partially offset by increased
production rates on the 767/Tanker program and stronger sales in the
Product Support segment resulting from key contract wins with regional
and commercial operators for components and accessories.

Operating income included $14.1 million of restructuring costs and $14.4
million loss on the pending sale of assets of Triumph Air Repair, the
APU overhaul operations of Triumph Aviation Services-Asia, Ltd. and
Triumph Engines-Tempe. Cumulative catch-up adjustments on long-term
contracts were a net favorable $2.1 million.

Net income for the third quarter of fiscal year 2017 was $29.3 million,
or $0.59 per diluted share. Triumph’s results included the following:

($ million except EPS)

Pre-tax

After-tax

Diluted EPS

Income from Continuing Operations- GAAP

$

35.5

$

29.3

$

0.59

Transformation related costs:

Loss on assets held for sale

14.4

10.5

0.21

Restructuring costs (non-cash)

3.1

2.2

0.05

Restructuring costs (cash)

11.1

8.1

0.16

Adjusted Income from Continuing Operations- non-GAAP

$

64.1

$

50.1

$

1.01

The number of shares used in computing diluted earnings per share for
the third quarter of fiscal year 2017 was 49.4 million.

For the quarter ended December 31, 2016, cash used in operations was
$41.4 million, which reflected continued investment in key development
programs and restructuring efforts. This was a $5.8 million improvement
from the prior quarter.

Outlook

Based on current aircraft production rates, the Company reaffirmed its
fiscal year 2017 revenue outlook of $3.5 to $3.6 billion and full year
earnings per diluted share guidance of $3.15 to $3.45. This guidance
assumes an effective tax rate of 18% and does not include any gain/loss
on divestitures.

The Company is adjusting its free cash use guidance to $190.0 million to
$210.0 million from $100.0 million to $120.0 million due to higher
working capital requirements related to a major development program. The
Company’s current outlook includes restructuring costs and benefits but
does not take into account any divestitures.

Conference Call

Triumph Group will hold a conference call today, February 2nd
at 8:30 a.m. (ET) to discuss the third quarter fiscal year 2017 results.
The conference call will be available live and archived on the Company’s
website at http://www.triumphgroup.com.
A slide presentation will be included with the audio portion of the
webcast. An audio replay will be available from February 2nd to February
9th by calling (888) 859-2056 (Domestic) or (404) 537-3406
(International), passcode # 51789715.

About Triumph Group

Triumph Group, Inc., headquartered in Berwyn, Pennsylvania, designs,
engineers, manufactures, repairs and overhauls a broad portfolio of
aircraft structures, components, accessories, subassemblies and systems.
The Company serves a broad, worldwide spectrum of the aviation industry,
including original equipment manufacturers of commercial, regional,
business and military aircraft and aircraft components, as well as
commercial and regional airlines and air cargo carriers.

Statements in this release which are not historical facts are
forward-looking statements under the provisions of the Private
Securities Litigation Reform Act of 1995, including statements of
expectations of or assumptions about financial and operational
performance, revenues, earnings per share, cash flow cost savings and
operational efficiencies and organizational restructurings. All
forward-looking statements involve risks and uncertainties which could
affect the Company’s actual results and could cause its actual results
to differ materially from those expressed in any forward looking
statements made by, or on behalf of, the Company. Further information
regarding the important factors that could cause actual results to
differ from projected results can be found in Triumph Group’s reports
filed with the SEC, including our Annual Report on Form 10-K for the
fiscal year ended March 31, 2016.

FINANCIAL DATA (UNAUDITED) ON FOLLOWING 10 PAGES

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES

(in thousands, except per share data)

Three Months Ended

Nine Months Ended

December 31,

December 31,

CONDENSED STATEMENTS OF INCOME

2016

2015

2016

2015

Net sales

$

844,863

$

913,866

$

2,612,885

$

2,828,278

Operating income (loss)

55,166

(126,250

)

172,379

91,663

Interest expense and other

19,698

15,792

55,721

49,539

Income tax expense (benefit)

6,136

(53,393

)

32,786

6,429

Net income (loss)

$

29,332

$

(88,649

)

$

83,872

$

35,695

Earnings per share - basic:

Net income (loss)

$

0.59

$

(1.80

)

$

1.70

$

0.73

Weighted average common shares outstanding - basic

49,329

49,228

49,294

49,213

Earnings per share - diluted:

Net income (loss)

$

0.59

$

(1.80

)

$

1.70

$

0.72

Weighted average common shares outstanding - diluted

49,440

49,228

49,421

49,312

Dividends declared and paid per common share

$

0.04

$

0.04

$

0.12

$

0.12

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands, except per share data)

BALANCE SHEET

Unaudited

Audited

December 31,

March 31,

2016

2016

Assets

Cash and cash equivalents

$

35,461

$

20,984

Accounts receivable, net

307,853

444,208

Inventory, net of unliquidated progress payments of $109,334 and
$123,155

1,474,054

1,236,190

Prepaid and other current assets

23,564

41,259

Assets held for sale

77,235

-

Current assets

1,918,167

1,742,641

Property and equipment, net

820,177

889,734

Goodwill

1,407,532

1,444,254

Intangible assets, net

605,248

649,612

Other, net

107,796

108,852

Total assets

$

4,858,920

$

4,835,093

Liabilities & Stockholders' Equity

Current portion of long-term debt

$

187,731

$

42,441

Accounts payable

403,921

410,225

Accrued expenses

561,817

683,208

Liabilities related to assets held for sale

14,125

-

Current liabilities

1,167,594

1,135,874

Long-term debt, less current portion

1,470,649

1,374,879

Accrued pension and post-retirement benefits, noncurrent

599,089

664,664

Deferred income taxes, noncurrent

82,322

62,453

Other noncurrent liabilities

558,450

662,279

Stockholders' Equity:

Common stock, $.001 par value, 100,000,000 shares

authorized, 52,460,920 and 52,460,920 shares issued

51

51

Capital in excess of par value

843,607

851,102

Treasury stock, at cost, 2,903,169 and 3,131,921 shares

(184,668

)

(199,415

)

Accumulated other comprehensive loss

(386,471

)

(347,162

)

Retained earnings

708,297

630,368

Total stockholders' equity

980,816

934,944

Total liabilities and stockholders' equity

$

4,858,920

$

4,835,093

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands)

SEGMENT DATA

Three Months Ended

Nine Months Ended

December 31,

December 31,

2016

2015

2016

2015

Net sales:

Integrated Systems

$

256,080

$

271,849

$

758,803

$

791,901

Aerospace Structures

304,235

346,639

956,114

1,127,230

Precision Components

226,294

250,284

740,354

781,250

Product Support

87,292

78,127

257,317

226,649

Elimination of inter-segment sales

(29,038

)

(33,033

)

(99,703

)

(98,752

)

$

844,863

$

913,866

$

2,612,885

$

2,828,278

Operating income (loss):

Integrated Systems

$

51,596

$

52,321

$

145,379

$

153,978

Aerospace Structures

23,867

(210,938

)

57,898

(132,458

)

Precision Components

2,942

24,106

7,223

74,468

Product Support

14,662

12,402

42,986

31,514

Corporate

(37,901

)

(4,141

)

(81,107

)

(35,839

)

$

55,166

$

(126,250

)

$

172,379

$

91,663

Operating Margin %

Integrated Systems

20.1

%

19.2

%

19.2

%

19.4

%

Aerospace Structures

7.8

%

-60.9

%

6.1

%

-11.8

%

Precision Components

1.3

%

9.6

%

1.0

%

9.5

%

Product Support

16.8

%

15.9

%

16.7

%

13.9

%

Consolidated

6.5

%

-13.8

%

6.6

%

3.2

%

Depreciation and amortization:

Integrated Systems

$

9,766

$

10,659

$

30,228

$

31,316

Aerospace Structures

17,942

245,266

54,289

276,845

Precision Components

13,999

11,407

42,344

39,600

Product Support

2,294

2,462

7,230

7,352

Corporate

330

434

989

1,224

$

44,331

$

270,228

$

135,080

$

356,337

Amortization of acquired contract liabilities:

Integrated Systems

$

(7,628

)

$

(9,804

)

$

(27,101

)

$

(30,316

)

Aerospace Structures

(21,105

)

(23,831

)

(60,190

)

(67,039

)

Precision Components

(473

)

(790

)

(1,740

)

(2,573

)

$

(29,206

)

$

(34,425

)

$

(89,031

)

$

(99,928

)

Capital expenditures:

Integrated Systems

$

2,763

$

10,444

$

8,586

$

20,309

Aerospace Structures

2,228

8,028

9,820

23,494

Precision Components

2,636

5,853

11,040

16,979

Product Support

687

714

2,020

2,047

Corporate

843

196

1,657

534

$

9,157

$

25,235

$

33,123

$

63,363

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands)

Non-GAAP Financial Measure Disclosures

We prepare and publicly release quarterly unaudited financial statements
prepared in accordance with GAAP. In accordance with Securities and
Exchange Commission (the “SEC”) guidance on Compliance and Disclosure
Interpretations, we also disclose and discuss certain non-GAAP financial
measures in our public releases. Currently, the non-GAAP financial
measure that we disclose is Adjusted EBITDA, which is our net income
before interest, income taxes, amortization of acquired contract
liabilities, curtailments, settlements and early retirement incentives,
legal settlements, depreciation and amortization. We disclose Adjusted
EBITDA on a consolidated and an operating segment basis in our earnings
releases, investor conference calls and filings with the SEC. The
non-GAAP financial measures that we use may not be comparable to
similarly titled measures reported by other companies. Also, in the
future, we may disclose different non-GAAP financial measures in order
to help our investors more meaningfully evaluate and compare our future
results of operations to our previously reported results of operations.

We view Adjusted EBITDA as an operating performance measure and as such
we believe that the GAAP financial measure most directly comparable to
it is net income. In calculating Adjusted EBITDA, we exclude from net
income the financial items that we believe should be separately
identified to provide additional analysis of the financial components of
the day-to-day operation of our business. We have outlined below the
type and scope of these exclusions and the material limitations on the
use of these non-GAAP financial measures as a result of these
exclusions. Adjusted EBITDA is not a measurement of financial
performance under GAAP and should not be considered as a measure of
liquidity, as an alternative to net income (loss), income from
continuing operations, or as an indicator of any other measure of
performance derived in accordance with GAAP. Investors and potential
investors in our securities should not rely on Adjusted EBITDA as a
substitute for any GAAP financial measure, including net income (loss)
or income from continuing operations. In addition, we urge investors and
potential investors in our securities to carefully review the
reconciliation of Adjusted EBITDA to net income set forth below,

in our earnings releases and in other filings with the SEC and to
carefully review the GAAP financial information included as part of our
Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K that
are filed with the SEC, as well as our quarterly earnings releases, and
compare the GAAP financial information with our Adjusted EBITDA.

Adjusted EBITDA is used by management to internally measure our
operating and management performance and by investors as a supplemental
financial measure to evaluate the performance of our business that, when
viewed with our GAAP results and the accompanying reconciliation, we
believe provides additional information that is useful to gain an
understanding of the factors and trends affecting our business. We have
spent more than 15 years expanding our product and service capabilities
partially through acquisitions of complementary businesses. Due to the
expansion of our operations, which included acquisitions, our net income
has included significant charges for depreciation and amortization.
Adjusted EBITDA excludes these charges and provides meaningful
information about the operating performance of our business, apart from
charges for depreciation and amortization. We believe the disclosure of
Adjusted EBITDA helps investors meaningfully evaluate and compare our
performance from quarter to quarter and from year to year. We also
believe Adjusted EBITDA is a measure of our ongoing operating
performance because the isolation of non-cash income and expenses,

such as amortization of acquired contract liabilities, depreciation and
amortization, and non-operating items, such as interest and income
taxes, provides additional information about our cost structure, and,
over time, helps track our operating progress. In addition, investors,
securities analysts and others have regularly relied on Adjusted EBITDA
to provide a financial measure by which to compare our operating
performance against that of other companies in our industry.

Set forth below are descriptions of the financial items that have been
excluded from our net income to calculate Adjusted EBITDA and the
material limitations associated with using this non-GAAP financial
measure as compared to net income:

Divestitures may be useful for investors to consider because they
reflect gains or losses from sale of operating units. We do not
believe these earnings necessarily reflect the current and ongoing
cash earnings related to our operations.

Legal settlements may be useful to investors to consider because they
reflect gains or losses from disputes with third parties. We do not
believe that these earnings necessarily reflect the current and
ongoing cash earnings related to our operations.

Curtailments, settlements and early retirement incentives may be
useful to investors to consider because it represents the current
period impact of the change in defined benefit obligation due to the
reduction in future service costs. We do not believe these charges
(gains) necessarily reflect the current and ongoing cash earnings
related to our operations.

Amortization of acquired contract liabilities may be useful for
investors to consider because it represents the non-cash earnings on
the fair value of below market contracts acquired through
acquisitions. We do not believe these earnings necessarily reflect the
current and ongoing cash earnings related to our operations.

Amortization expenses may be useful for investors to consider because
it represents the estimated attrition of our acquired customer base
and the diminishing value of product rights and licenses. We do not
believe these charges necessarily reflect the current and ongoing cash
charges related to our operating cost structure.

Depreciation may be useful for investors to consider because they
generally represent the wear and tear on our property and equipment
used in our operations. We do not believe these charges necessarily
reflect the current and ongoing cash charges related to our operating
cost structure.

The amount of interest expense and other we incur may be useful for
investors to consider and may result in current cash inflows or
outflows. However, we do not consider the amount of interest expense
and other to be a representative component of the day-to-day operating
performance of our business.

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands)

Non-GAAP Financial Measure Disclosures (continued)

Income tax expense may be useful for investors to consider because it
generally represents the taxes which may be payable for the period and
the change in deferred income taxes during the period and may reduce
the amount of funds otherwise available for use in our business.
However, we do not consider the amount of income tax expense to be a
representative component of the day-to-day operating performance of
our business.

Management compensates for the above-described limitations of using
non-GAAP measures by using a non-GAAP measure only to supplement our
GAAP results and to provide additional information that is useful to
gain an understanding of the factors and trends affecting our business.

The following table shows our Adjusted EBITDA reconciled to our net
income for the indicated periods (in thousands):

Adjusted income from continuing operations before income taxes, adjusted
income from continuing operations and adjusted income from continuing
operations diluted per share, before non-recurring costs has been
provided for consistency and comparability. These measures should not be
considered in isolation or as alternatives to income from continuing
operations before income taxes, income from continuing operations and
income from continuing operations per diluted share presented in
accordance with GAAP. The following table reconciles income from
continuing operations before income taxes, income from continuing
operations and income from continuing operations per diluted share,
before non-recurring costs.

Three Months Ended

December 31, 2016

Pre-tax

After-tax

Diluted EPS

Income from Continuing Operations- GAAP

$

35,468

$

29,332

$

0.59

Transformation related costs:

Loss on assets held for sale

14,350

10,476

0.21

Restructuring costs (non-cash)

3,065

2,237

0.05

Restructuring costs (cash)

11,067

8,079

0.16

Adjusted Income from Continuing Operations- non-GAAP

$

63,950

$

50,124

$

1.01

Nine Months Ended

December 31, 2016

Pre-tax

After-tax

Diluted EPS

Income from Continuing Operations- GAAP

$

116,658

$

83,872

$

1.70

Adjustments:

Triumph Precision Components - Strike related costs

15,701

11,462

0.23

Triumph Precision Components - Inventory write-down

6,089

4,445

0.09

Triumph Aerospace Structures - UAS program

14,200

10,366

0.21

Loss on divestiture and assets held for sale

19,124

15,250

0.31

Restructuring costs (non-cash)

10,296

7,516

0.15

Restructuring costs (cash)

28,180

20,571

0.42

Adjusted Income from Continuing Operations- non-GAAP

$

210,248

$

153,482

$

3.11

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands)

Non-GAAP Financial Measure Disclosures (continued)

Three Months Ended

December 31, 2015

Pre-tax

After-tax

Diluted EPS

Loss from Continuing Operations- GAAP

$

(142,042

)

$

(88,649

)

$

(1.80

)

Adjustments:

Legal settlement charges

12,400

8,531

0.17

Tradename impairment

229,200

148,751

3.02

Adjusted Income from Continuing Operations- non-GAAP

$

99,558

$

68,633

$

1.39

Nine Months Ended

December 31, 2015

Pre-tax

After-tax

Diluted EPS

Income from Continuing Operations- GAAP

$

42,124

$

35,695

$

0.72

Adjustments:

Legal settlement charges

12,400

8,531

0.17

Tradename impairment

229,200

148,751

3.02

Facility consolidation costs

5,360

3,688

0.07

Curtailment charge

2,863

1,970

0.04

Adjusted Income from Continuing Operations- non-GAAP

$

291,947

$

198,635

$

4.03

*

*

Difference due to rounding.

The following table reconciles our Operating income to Adjusted
Operating income as noted above.

Three Months Ended

Three Months Ended

December 31, 2016

December 31, 2015

Operating Income (Loss) - GAAP

$

55,166

$

(126,250

)

Adjustments:

Loss on assets held for sale

14,350

-

Tradename impairment

-

229,200

Legal settlement charges

-

12,400

Restructuring costs (non-cash)

3,065

-

Restructuring costs (cash)

11,067

-

Adjusted Operating Income-non-GAAP

$

83,648

$

115,350

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands)

Non-GAAP Financial Measure Disclosures (continued)

Cash provided by operations, is provided for consistency and
comparability. We also use free cash flow available for debt reduction
as a key factor in planning for and consideration of strategic
acquisitions and the repayment of debt. This measure should not be
considered in isolation, as a measure of residual cash flow available
for discretionary purposes, or as an alternative to operating results
presented in accordance with GAAP. The following table reconciles cash
provided by operations to free cash flow available for debt reduction.

Three Months Ended

Nine Months Ended

December 31,

December 31,

2016

2016

Cash flow from operations

$

(41,415

)

$

(172,651

)

Less:

Capital expenditures

(9,157

)

(33,123

)

Sale of assets

13,141

23,185

Free cash flow available for debt reduction, acquisitions

and share repurchases

$

(37,431

)

$

(182,589

)

We use "Net Debt to Capital" as a measure of financial leverage. The
following table sets forth the computation of Net Debt to Capital:

BERWYN, Pa.--(EON: Enhanced Online News)--Triumph Group, Inc. (NYSE:TGI) today announced that its Board of Directors has declared a regular quarterly dividend of $0.04 per share on its outstanding ... more »